Frasers Hospitality Trust's NPI fell 9.1% to $25.21m in Q2

It blamed weaker performance from its Australia, Malaysia and Japan portfolios.

Frasers Hospitality Trust (FHT) extended its Q1 downward spiral after its net property income (NPI) slipped 9.1% YoY to $25.21m in Q2 from $27.75m in 2018, an announcement revealed. Revenue also dropped 7.6% YoY from $37.49m to $34.62m.

For H1 2019, NPI dipped 4.9% YoY to $56.28m from $59.2m, whilst revenue edged down 5.2% YoY from $78.94m to $75.25m.

Also read: Frasers Hospitality Trust NPI slipped 1.2% to $31.06m in Q1

FHT’s dismal earnings were blamed on the weaker performance of its Australia, Malaysia and Japan portfolios. In addition, the foreign exchange impact of all functional currencies on revenue and NPI ranged from -0.8% to -6.6%, and accounted for 53% and 40% of the decline in GR and NPI, respectively. However, these were partially mitigated by better performance of the UK portfolio which reported stronger revenue per available room (RevPAR) growth in Q2, the firm explained.

According to CEO Eu Chin Fen, FHT’s properties in Sydney were affected by the challenging trading environment in the city, and softer group and leisure demand, whilst The Westin Kuala Lumpur reported lower room and food and beverage (F&B) revenue as corporate demand remained weak for some time.

“ANA Crowne Plaza Kobe turned in stable room revenue in this quarter although its F&B revenue was affected by the reduced wedding business,” she added. Notwithstanding a weak lodging market, the hotel improved its RevPAR by 0.4%, hence increasing its market share during the quarter.

The performance of the Singapore portfolio remained stable in Q2, with gross operating revenue (GOR) increasing by 0.9% and gross operating profit (GOP) declining by 0.7% YoY. The portfolio’s RevPAR also grew 2.2%, underpinned by higher occupancies, primarily at Fraser Suites Singapore. However, the absence of the Singapore Airshow and competition from new entrants in the Bugis precinct continued to exert downward pressure on InterContinental Singapore (ICSG)’s average daily rate (ADR).

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The UK portfolio’s GOR and GOP increased 14.2% and 11.4% YoY, respectively, whilst RevPAR was 13.2% higher YoY as all the UK properties reported strong RevPAR growth. The full renovation of ibis Styles London Gloucester Road, which lasted 7 months, was completed in February 2019. Post-renovation, the hotel achieved a strong RevPAR growth of 31% on the back of improved occupancy and higher ADR.

“Moving ahead, we will continue to proactively pursue opportunities to rebalance and optimise our portfolio to create value for our stapled securityholders. We will also stay focused on driving operational efficiency and revenue growth with our operators,” Eu added.